Property tax abatements draw crowd to city council

By DONNA SCHILL CLEVELAND, Ledger staff writer | Nov 27, 2012

The Fairfield City Council made significant strides toward implementing an urban revitalization plan — granting residential and property tax abatements for property improvements — during a public hearing Monday night at Fairfield City Hall.

A gathering of about 50 citizens shared their thoughts and concerns about the city’s proposed plan. After addressing questions, councilman John Revolinski made a motion to adopt the plan, and the council unanimously passed it through the first of three readings. Mayor Ed Malloy and councilwoman Susan Silvers were not in attendance.

Under the new plan, the city would offer homeowners three years of tax exemption on as much as $75,000 of improvements. The ordinance would extend commercial and industrial abatements, offering a 100 percent break on the total value of improvements for a period of three years. The city would require improvements increase the value of the building by at least 10 percent. Any improvements would qualify on land without any current development.

The full plan is available online at cityoffairfieldiowa.com.

City attorney John Morrissey opened the public hearing with an overview of the plan.

“The reason towns do this and forgive taxes is because in the end it benefits all taxpayers in the community,” said Morrissey. “It improves dwellings, businesses, industries and grows the net tax base.”

Morrissey said he’d received a few dozen phone calls from citizens wishing to apply and had to remind them the plan was not yet law.

To allow time for additional public feedback, the plan must pass through two additional readings during December and January council meetings before the city could adopt the ordinance Feb. 1.

To begin the process, Morrissey said interested citizens should pick up the two-page application at city hall, which requires information about the nature of the improvement, its cost and its estimated date of completion. If the ordinance passes, residents can submit the completed application for the city council to review.

If the council approves the project, the application would then go to the county assessor’s office.

“At that point, it’s between you and the county assessor,” he said.

The county assessor does the physical assessment of the improvement. If a property owner is unhappy with the price the assessor determines as the value of the work done, Morrissey said the city would not be involved in the appeal process.

“Most of the time, the value comes in fairly close to what you put in,” he said.

While Morrissey said most public feedback was from citizens eager to apply, others were worried about giving tax breaks to commercial developers and other large entities.

Fairfield resident Jennifer Diamond had such concerns and wanted to know if property tax abatements were proven to have the intended result.

“I understand the theory of increasing the tax base, but what data do we have?” she said.

Morrissey and the council said commercial properties in town had found abatements useful, such as Orscheln’s Farm and Home Store, the Tractor Supply Company and Kum & Go. Executive director of Fairfield Economic Development Association Tracy Vance said abatements are the first thing developers ask about when looking at building in Fairfield.

Councilwoman Connie Boyer said while an informal survey in 2004 proved residential tax abatement unsuccessful, she believed now the response might be different. At the time, she said, about nine out of 10 people who used the abatement reported they would have made improvements with or without the program.

Boyer said Fairfield is more in need of growth than a decade ago, and could therefore be in a better position to make use of such incentives.

“Now we know people who wanted to move to Fairfield haven’t because they couldn’t find appropriate housing,” she said. “Although I’m not a big fan of it, I can be swayed that this is a good idea.”

“We have an economy that, politically speaking, could use a boost,” said Morrissey. “We haven’t had a housing study in awhile, but everybody believes we have a housing need.”

Some residents wanted more information about eligibility. According to the plan, nine areas of town benefiting from a tax increment financing program would not be eligible for tax abatement. The areas include FEDA industrial park, Dexter industrial park, Park Place Subdivision, Southgate Condominiums, Carrington Pointe Condominiums, Wagon Wheel Senior Apartments, Jackson Pointe, Fairfield Arts & Convention Center and AmericInn Road.

Morrissey said it was unlikely the TIF areas would wish to apply for tax abatement because they are already highly developed. However, he said citizens living in residential development areas could ask the city to waive the restriction.

Fairfield resident Clyde Cleveland asked for clarification about what taxes would be waived.

“The improved portion would not appear on the assessment for three years,” said Revolinski. “But it will appear on county, school, hospital and state assessments.”

Cleveland said the abatement could lead to a boom in construction and improved properties in town.

“It could encourage people who have property to hire people to do work. The improvement of existing property is important,” Cleveland said.

Beth Williams of Walton Lake suggested county residents should benefit from such an abatement as well.

“We need to think of ourselves as a cooperative unit,” she said.

Morrissey said, while complicated, the Jefferson County Board of Supervisors could implement an urban revitalization plan for the whole county if citizens showed interest.